3 Min. Gold News – Jim Rickards – Bloomberg – January 24, 2015

3 Minute Gold News

A Quick Read for Busy People

A 3 minute synopsis of an interview with Jim Rickards, New York Times bestselling author of The Death of Money and Currency Wars, by Trish Regan from Bloomberg TV.

Topics:

Zero Percent Interest Rates
Oil Prices

Jim Rickards

Interview link 1

Interview link 2

ZERO PERCENT INTEREST RATES

Keeping interest rates at zero is a $400 billion per year wealth transfer from everyday Americans into Jamie Dimon’s pockets.

It goes to the big banks and lowers their cost of funds. They can invest in treasuries — a pretty safe trade — and leverage it up to get 15 – 20% returns on equity.

No one gives a speech like President Obama — he’s a great speech maker — but the shadow of the crisis has not passed. The shadow of the crisis is getting longer.

There are 51 million Americans on food stamps, 11 million Americans on disability, and household income is going nowhere.

Americans are aspirational but the government is standing on their neck.

The more you tax something, the less you get of it. If you tax capital gains then you’ll get less of it.

OIL PRICES

Saudi Arabia can control the price of oil to some extent.

They have three targets:

1. Iran — because of Iran’s nuclear program
2. Russia — because of Russia’s support for Syria
3. Fracking companies

The magic price is about $60 per barrel. That’s the number which puts the frackers out of business but Saudi Arabia doesn’t hurt itself too badly.

Going down from $100 to $60 had some overshoot, and it’s at about $45 right now, but we may be near the low.

The tendency will be to go between $50 – $60 per barrel, but it’s not going to go up a lot from there quickly.

The supply will start to taper off, but not right away. If you’re pumping oil and your assumptions were $80 per barrel, you’re not going to stop pumping right away because you want the cash flow.

What you won’t do is start new wells, and what you will do is cut capital expenditure budgets. That will hurt GDP going into 2015.

It might only hurt 1/4 of 1%, but GDP isn’t that great to begin with, so if you take out .25 or .5 then you’re back to the 2% growth that the US has had since 2008.

Money that people save at the gas pumps could be spent and help GDP, but it could also be used to pay off student loans and car loans.

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Gold is $1,294.10 US per ounce via Kitco.

This is What Gold Does in a Currency Crisis via Zero Hedge

Is This the Start of a Gold Bull Market? via CNBC

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